Does focusing too much on the story of social good behind a business hinder long-term success?

As increasingly informed shoppers looking to deepen the value of their spending, consumerism seems to be evolving, with social entrepreneurs playing integral roles. But how much is it responsible for bottom-line profits?

It’s Saturday afternoon mid-December and Indigo bookstore on Toronto’s upscale Bloor Street strip is a frenzy of literate gift givers on a mission. Amid the chaos, one spot on the top floor is attracting particular attention. It’s a trunk show displaying handcrafted one-of-a-kind jewellery by designer and Sapphô founder, Kim Smiley.

Launched two years ago, the business is quickly gaining traction, both for its story and unique style. The stunning pieces combine antique and metallic lace, semi-precious gems, vintage objects and Swarovski elements. Every design is named after a poet and accompanied by a poem from their body of work, which may explain Ms. Smiley’s presence at a bookstore. That Heather Reisman, chief executive of Indigo, is a fan doesn’t hurt (she was spotted wearing one of Sapphô’s lace cuffs, in the recent Maclean’s Power Issue).

Sapphô’s appeal is a testament to the burgeoning trend of social purchasing — buying products with an ethical, environmental or socially conscious mandate. Thanks to headline-grabbing companies such as TOMs and increasingly informed shoppers looking to deepen the value of their spending, consumerism seems to be evolving — with social entrepreneurs playing integral roles.

A longtime executive in the non-profit sector, Ms. Smiley was looking to meld art with social good, to combine an obvious talent for creating what she calls “wearable works for art” with lending a helping hand.

Boasting the tagline, “beauty for the public good,” Sapphô offers local, marginalized women training, work experience and an hourly wage of $18. Sapphô also organizes trunk shows, donating 20% of proceeds to charitable causes. “I didn’t want to just start a jewellery company; that had no appeal,” Ms. Smiley says. “The social purpose is more exciting to me than the jewellery.”

Some wonder if focusing too much on “the story” can hinder long-term success. “It’s very difficult to launch something and have enough headroom to extract both profits and social good,” says a skeptical Alison Kemper, assistant professor in Entrepreneurship and Strategy at Ryerson University. “The jury is still out on how many of them can be viable businesses in the long-run.”

While Sappho has grown more than 100% in two years, with its pieces ranging from $85 to $1,300 (sold online and at select retailers including Elte), if you factor in an average three-and-half hours each woman earning a living wage spends sewing one bracelet, Ms. Kemper’s concern is understandable.

“Some have criticized me for giving away too much,” Ms. Smiley admits of advisors who worry she’s bringing her charitable sector mindset to enterprise, undermining her profitability. But she is confident the opposite is true. “The more I give, the more my company succeeds,” she says. “I believe that giving away more has been intrinsic to me being successful.” In other words, for her, the story is paramount.

Not so for Tal Dehtiar, owner of Oliberté, a shoe company promoting a more sustainable Africa. “If you really want to change the economy, manufacturing is a quick way to hire a lot of people,” he says. To best accomplish that goal, in 2012 Mr. Dehtiar bought a factory in Addis Ababa, Ethiopia, which employs 110 workers, up from 57 last year, and produces every pair of Oliberté premium leather shoes and other products.

Peter J. Thompson/National Post files

Shoes can be purchased online or at 85-plus stores (mostly in the U.S.), including, Mountain Equipment Co-op, SportCheck, Nordstrom and Zappos. “We’re growing but we’re also smart about it,” he says. The “slow and steady” approach has seen Oliberté average 105% year-over-year growth. “We’re very careful about where we put our money because we want to be sustainable,” he says. “And we have 110 mouths to feed.”

To authenticate his socially conscious efforts, Oliberté, is a BCorp and member of Fair Trade USA, recently becoming the world’s only fair trade-certified footwear manufacturing factory. No question, Mr. Dehtiar’s commitment to a multi-bottom line is essential but here’s where he distinguishes himself from Ms. Smiley.

“We can check off all the [social] boxes but if that’s what we lead with, we’re never going to sell enough shoes to make it worth it,” he says. Customer surveys seem to validate his opinion, finding less than 20% care significantly about the story. “Most purchasers just like the look and style of the products,” he says.

Oliberté’s website looks like any other shoe company, though more in-depth information is available if you’re looking for it. “I want to do it in the right way, that will sustain the jobs we create for the workers, we just don’t propagate the story,” says Mr. Dehtiar, adding that most successful brands prioritize their products.

“You can’t let the social mission become more important than making sure the economics are in place,” agrees Michael Sacco, who runs ChocoSol, a social enterprise learning community in Toronto that makes organic, artisanal chocolate. The self-described slow food chocolate maker uses cacao beans sourced directly from indigenous communities and forest gardens in Mexico with whom the company is engaged in unique trade relationships and pays above Fair Trade organic prices. It also uses compostable and reusable packaging, produces its own soil through worm composting and conducts 80% of its deliveries on bike.

Torontonians may have seen its pedal-powered machines — bicycle blenders — at farmers’ markets around town. For the past 10 years, ChocoSol has been attracting attention for its innovative tools and healthy, socially conscious products. The company is profitable and is experiencing a growth curve but Mr. Sacco has learned a lot after a decade in business. One example, he cites, is that the money he put toward bicycle and prototype technology may have been better spent on areas he felt less passionate about: product improvements and generating greater revenues.

Brent Foster/National Post files

ChocoSol is proud of its transparency and a story that captures hearts and minds, Mr. Sacco says, “but that can also be a distraction from what needs to be done in terms of production and sales.”

There’s another distraction at play, Mr. Dehtiar says, and it’s the consumer that needs to pay attention as more and more entrepreneurs leverage the popularity of social purchasing to their marketing advantage. To wit: the organic bandwagon. “Who cares if you’re organic if it tastes horrible?” he asks. What’s more, people throw labels on themselves without going through rigorous audits and still reap a benefit, a fact he finds worrisome, because it leads to dishonesty and premium prices.

It also leads to a hyper-competitive social purchasing marketplace. Mr. Dehtiar says he distinguishes himself with a model that’s sustainable and not fad-driven but adds, “At the end of the day the better product and better business should survive.”

Elisa Birnbaum writes about social entrepreneurship and is the publisher and editor of SEE Change Magazine. She can be reached at elisa@seechangemagazine.com